Sensex jumps 1,017 pts on RBI's 50-bps hike; Nifty nears 17,100; banks lead

CLOSING BELL: The benchmark indices snapped their seven-day losing streak as the RBI delivered a 50-basis point repo rate hike, and underscored the resilience of the Indian economy in his statement

1:10 PM

COMMENT | Banks with a higher share of floating rates to be better placed

The RBI increased the repo rate by 50 bps, in line with expectations, with core inflation being sticky and continuing to hover over the upper tolerance limit, unfavorable global conditions, and the Indian rupee depreciating against the dollar.

The RBI has retained its inflation estimates for FY23, with relief visible only from Q4 onwards. It has also tweaked its growth estimates to 7% for FY23.

With RBI data indicating strong credit growth, currently at a multi-year high, we believe most banks, especially those with a higher share of the floating rate will be better placed in the rising interest rate environment.

However, the lagging deposit growth remains a cause of concern. While India is in a better place than its global peers, with domestic indicators showing continuous improvement, global factors such as ECB and Fed’s indication of steeper rate hikes in the coming policies will continue to force RBI to front load interest rates in the coming MPC meetings.

Views by Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS. 

12:56 PM

Post rate hike by RBI, SBI, BoB look stronger than private banks on charts

Public sector banks are well placed on charts, indicate positive upside in coming days, while Private Banks rigorously need to take off their respective hurdles. Read more

12:46 PM

RBI Presser LIVE: RBI rate policy will not be determined by actions of other central banks

>> Our policy will not be determined by what rates prevail outside, or by the actions that other central banks take.
>> Our policy action will be guided solely by domestic factors, says Guv Das.

12:42 PM

RBI Presser LIVE: CPI inflation remains high at present, could be over 7% in September

>> But we do expect moderation going ahead, hence, have retained projected inflation for FY23.
>> Several indicators hint at resilience in the economy.

12:42 PM

MARKET CHECK | Sensex at day's high, surges 900 points

12:34 PM

RBI Presser LIVE: CAD may slightly expand in first half; but moderate in the second half of FY23

>> Overall, we expect CAD to remain 3% of GDP

12:32 PM

RBI Presser LIVE: RBI does not target an exact rate of the Rupee

>>Have received responses from many countries (4-5) and local banks for Rupee trade settlement.

12:29 PM

RBI Presser LIVE: India's vulnerability on FX reserves far lesser vs EMs

>>Taking into account the current reserves, we remain comfortably placed
>> Our reserves' buffer remains firm

12:25 PM

RBI Presser LIVE: Banks will raise deposit rates to meet rise in credit demand

>>Bank credit picking up. Banks need more resources for which they have to raise deposit rates.
>>Expect banks to consider and raise deposit rates

12:22 PM

RBI Presser LIVE: Expect inflation to come closer to target in a 2-yr cycle

12:20 PM

RBI Presser LIVE: Remain focussed on price stability

>> Soft landing remains for advanced economies. It is a take-off for India, says Deputy guv Michael Patra.

12:16 PM

RBI Presser LIVE: Card tokenisation system ready to go live

>>Some particpants may not still be ready
>> But we don't want to keep hold back

12:14 PM

RBI Presser LIVE: Net LAF has continued to be in surplus for last 2 yrs, says Guv

>> Liquidity remains surplus.
>>System liquidity remains around to the tune of Rs 5 lakh crore
>>No need to worry over liquidity deficit/ tightening

12:12 PM

RBI Presser LIVE: Have to deal with spillovers from global headwinds

>> Have not used front-loading in the MPC resolution
>> In India, imported inflations plays out. Financial markets including currency are volatile
>> US Fed guidance talks of future rate hikes, so stress on global financial system has increased.
>> We have to deal with the spillovers.

12:06 PM

RBI Presser LIVE: MPC decisions to continue to be guided by domestic factors

>> MPC decisions to continue to be guided by domestic inflation and growth
>>Currency market volatility not a guiding factor